Many people, when drawing up a will and considering how their assets should be distributed when they die, fail to give much attention to their digital possessions. They don’t consider whether they need to be included in the deceased estate, who should inherit them, and, equally importantly, they don’t consider how their executor or heirs could access them.
It’s quite startling just how much we accumulate digitally, and how valuable some of these digital assets may be – perhaps not to the outside world, but certainly of personal value to family members. We must also recognise that there is a mountain of private information buried in all that data, including access details (logins and passwords) to bank and investment accounts, which we don’t want landing in the wrong hands.
What are digital assets?
Digital assets can broadly be divided into personal assets, which are unlikely to hold any financial value in your estate, and crypto assets, based on blockchain or similar technologies, which can be traded on an open market and which therefore need to be identified as financial assets in your estate. Both types of assets may be held on a personal harddrive or in the cloud.
• Personal assets: These include digital photographs, documents, videos, books, music, animations, illustrations, manuscripts, subscriptions, loyalty and rewards programme memberships, cloud storage accounts, emails and email accounts, social media accounts, and gaming accounts.
• Crypto assets: These include cryptocurrencies, tokenised assets, and nonfungible tokens.
Jainal Narsai, fiduciary specialist at Alexforbes, says that, in their estate planning, people give little thought to what will happen to their online accounts and digital records after their death. “The result is that executors and family members are often left trying to piece together a person’s digital footprint without a clear understanding of what exists or how it can be accessed,” he says.
“A collection of family photographs stored in the cloud, for example, may have little monetary worth but could hold immense sentimental value for loved ones. Access to social media accounts may help preserve memories and connections that family members would otherwise lose,” Narsai says. “Cryptocurrency holdings, on the other hand, represent a substantial financial asset that may be impossible to recover if the necessary information is not available.”
Narsai says the challenge is not generally whether digital assets form part of an estate – in most instances, they do. The greater difficulty lies in ensuring that they can be identified and accessed. “Unlike physical documents, digital assets often leave no obvious trail. If nobody knows they exist, they may never form part of the estate administration process,” he says.
How do I deal with them?
Addressing this risk does not require complicated planning. “One of the most effective steps is simply to maintain a record of your digital footprint. This should include details of financial accounts, social media profiles, subscription services, online businesses and any digital wallets or cryptocurrency holdings,” Narsai says.
However, be careful who knows about this information, and don’t include logins and passwords in your will. Narsai explains: “During the administration of an estate, a will may become accessible to various parties involved in the process. Including passwords or security details in the document creates unnecessary risks,” he says.
Instead, ensure that access information is stored securely and that a trusted person or executor knows how to obtain it if required. “The objective is to strike a balance between protecting information during one’s lifetime and ensuring that authorised individuals can access it after death,” Narsai says.
An overlooked aspect of digital estate planning is the range of options offered by online platforms themselves. “Many social media and digital service providers now allow users to nominate legacy contacts or specify how accounts should be managed after death. These settings can help provide clarity and reduce uncertainty for family members at a difficult time,” he says.
Estate planning that overlooks digital assets is, increasingly, estate planning that is incomplete. “You need to ask whether your executor knows where original documents is stored, whether digital assets have been identified and whether clear arrangements exist to manage them. Taking these relatively simple steps can make a significant difference to those left behind and help ensure your wishes are carried out as intended,” Narsai says.
